China Securities Co.,Ltd.: It is expected that domestic energy storage will still have growth momentum and potential in 2027.

China Securities Co.,Ltd. released a research report stating that since 2026, the pace of domestic large-scale energy storage installations has been relatively slow, with actual project implementation falling short of expectations, primarily due to the decline in peak-valley price spreads in the Northwest region. Meanwhile, since the beginning of this year, rising system operation fees, slow progress in implementing capacity electricity prices across provinces, lithium carbonate price increases, and delays in grid connection approvals have also affected the operational economics of energy storage. Looking ahead to 2027, with lithium carbonate price declines, demand growth in North China, Northeast China, South China and other regions, as well as new scenarios such as computing power synergy driving demand, it is expected that domestic energy storage will still have growth momentum and potential in 2027. China Securities Co.,Ltd.'s main viewpoints are as follows: Since 2026, the growth rate of domestic large-scale energy storage installations has fallen short of expectations, primarily due to the decline in peak-valley price spreads in the Northwest region From January to September 2026, domestic newly added energy storage installations reached 35.3GW/102.3GWh, up -3% and +6% year-on-year respectively. The installation growth rate fell short of expectations, with the most core reason being the narrowing of peak-valley price spreads in the Northwest region: for example, the average peak price in Western Inner Mongolia from January to April declined by approximately 40%-47% year-on-year. The bank judges the reasons to be: (1) the load growth rate in the Northwest has been relatively slow since the beginning of this year, which is somewhat related to economic structural adjustment and cooler summer weather, affecting the intensity of evening peak electricity prices; (2) Inner Mongolia's operational energy storage installations have reached 22GW, while the peak load of Eastern Inner Mongolia + Western Inner Mongolia is approximately 51GW, and the suppression of evening peaks by energy storage nighttime discharge can no longer be ignored; (3) Wind power has become the dominant new energy installation in the Northwest, and its "anti-peaking" characteristics also exert suppression on evening peaks. Other important reasons include rising system operation fees, slow implementation of capacity electricity prices, and stricter and slower grid connection approvals The average system operation fee across all provinces nationwide has increased by 3 fen/kWh compared to last year, equivalent to reducing the peak-valley price spread actually obtainable from energy storage operations. The actual implementation progress of capacity electricity prices has also been slow, with issues of delayed disbursement. Stricter and slower grid connection approvals, and the relatively significant lithium carbonate price increases in the first half of the year, have also had an impact. The bank has lowered its forecast for domestic large-scale energy storage new installations in 2026 to 230~250GWh, a year-on-year increase of approximately 21%~32%. Domestic large-scale energy storage still has growth drivers in 2027 (1) Lithium carbonate price declines are expected to boost the investment economics of energy storage. Lithium carbonate prices of approximately 3 fen/Wh would increase the all-investment IRR by approximately 0.5% and the equity IRR by approximately 2%; (2) Demand is shifting to provinces such as Shanxi, Shandong, Hebei, and the Northeast region. Peak-valley price spreads in Shanxi, Shandong, Hebei, and the Northeast region are at 0.3-0.4 yuan/kWh, offering relatively good investment economics for independent energy storage; (3) Business models such as joint market participation of new energy paired with energy storage and computing-power synergy are gradually being established.